What Determines the Price of Cotton?

What Determines the Price of Cotton

At Barnhardt, you’d imagine people come to us with lots of questions about our favorite all-natural fiber, cotton. And you’d be right! One question we get quite a bit around here is, “What determines the price of cotton?”

There are actually several factors that influence the price of cotton, but it all boils down to market and quality.

The Commodities Markets

Global commodities markets, where cotton is traded among buyers and sellers on a daily basis, would have the heaviest influence on the price of cotton. The markets not only represent current, real-time supply and demand, but can also fluctuate based on events and other factors that will influence future markets. For example, Hurricane Harvey, a devastating storm that ruined a significant portion of the US cotton belt’s 2017 crop, pushed prices up temporarily, as demand outpaced supply.

Another key factor in determining cotton price, from a market perspective, is the amount of cotton that China imports on an annual basis. With nearly one-eighth of the world’s population within its borders, China can influence many commodity markets with large price swings based on its economic performance and resultant supply and demand.

The US commodities market displays the daily price of cotton in cents per pound. As of this writing, traders are selling cotton at about 84 cents per pound. For a little historical perspective, cotton has traded between 55 cents and 90 cents per pound since 2012.

Cotton Quality

As with any commodity, traders get the best prices they can for cotton based on the quality of the crop. Several drivers influence the price of cotton from a quality perspective. At a very top level, classers sort cotton crops into classification grades. Until the modern era, classers determined the composite grade based on color and trash content. Since the early 1990s, the high-volume instrument (HVI) system has been used to objectively measure key fiber properties, providing a high level of quality control and standardization.

Color

Classers grade cotton according to color, in the following varieties: white, light spotted, tinged, and yellow stained. Each grade, according to the modern classification system, will have the presence of leaf and/or bark (also known as trash).

The color of cotton is important. Consumers like their cotton white, as white connotes purity. Also, since the color of cotton runs nearly the entire spectrum (notably, not blue), non-white colors may see use in products where the cotton itself isn’t on display. But for products like t-shirts, for example, you want to see the highest-grade of white cotton, for both the natural coloring of white shirts and truer dyeability on shirts of different colors.

Uniformity

Fiber length, with specific regard to its uniformity, is especially important when measuring quality to determine the price of cotton. The industry uses the Length Uniformity Index (LUI) to measure the ratio of the average length to the upper-half-mean-length of the fibers. The greater the fiber uniformity, the better the performance on the loom with the spinning of yarn.

Leaf

The leaf grade index is a measure of the overall grade of cotton determined by the average of the bales in each leaf category. Thus, if a particular lot has a heavy percentage of white cotton, the leaf grade will be higher; conversely, if the lot has a heavier percentage of bales that are light spotted or other barky grades, the lot will be considered to have an overall lower leaf grade and corresponding price.

Staple Length

Staple length is very important to the price of cotton. This measurement of quality is determined as the average of the longest 50 percent of the fibers, a determination also known as upper half mean length. Staple length has a corresponding effect on the quality of fabrics, thus bales with longer staple length, on average, command a higher price.

Micronaire

Micronaire is a term that references the air permeability of the bale’s compressed cotton fibers. When people think of all-natural products like cotton, they dwell on attributes related to touch or feel. Cotton is thought of as one of the softer fabrics (not quite as soft as silk, for example), and its breathability is perhaps its greatest market attribute. Micronaire indicates fiber fineness and maturity of the lot.

Strength

Strength, which measures the force, in grams, required to break a bundle of fibers one tex unit in size, is an important element of the quality of fiber. Among the many attributes of cotton, strength is very important to price, as strong fibers can be used in a variety of applications, such as wipes, as well as feminine and baby products. The stronger the fibers, the less prone to tearing the fabric becomes, thus commanding a higher price.

Trash Content (Bark, Leaf, and Other Extraneous Matter)

As we’ve stated earlier, all cotton, no matter the grade, contains trash, defined as the measure of non-lint particles, like leaf and bark, found in the bale. Classers measure this dynamic as the percentage of the surface area occupied by trash when a cotton sample is scanned by a camera. The greater the trash content per bale, the less actual cotton there is to process, purify, or use. Thus, the higher the trash content, the lower the price.

Conclusion

While understanding the many uses of cotton is rather simple and straightforward, the factors that influence its price, from the complexity of considerations driving the commodities markets worldwide to the multiple factors that derive from the classification and grading of cotton, can be tough to understand. The bottom line is that there are many varieties of cotton grown to varying qualities of color, strength, uniformity, length, and other factors, and manufacturers and consumers need to educate themselves on the impact that price and quality have on market uses for this incredibly useful plant.

To get monthly updates on the world of cotton as we know it here at Barnhardt, sign up for our informative newsletter. Stay tuned to this space for future installments in this series, as we explore the grades of cotton further and how these grades determine the use of cotton.

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